The surge in exports of Brazilian beef to the US in 2022 has meant that the 65,000 tariff-free quota that is also used by Irish beef exporters is filled by the end of the first quarter of the year.

This means that any Irish beef exports to the US from now until the end of the year when quotas are reset, will be subject to a 26% tariff.

Given that Irish beef was struggling for sales in the US anyway, this effectively means that the US will not be a meaningful export destination for beef for the remainder of 2022.

Irish beef sales to the US have been disappointing since the launch seven years ago.

Precedent

There had been an expectation that the strong Irish-American community would generate a demand for Irish beef.

There was a precedent with huge sales of Kerrygold butter and it was thought that beef could prosper in the slipstream of Irish dairy.

This has failed to happen. The US was never likely to be a high-volume market for the higher-value cuts as the US is a net exporter of these, primarily to Asian and high-value Middle East markets.

Such is the volume of these exports is that the US is the second-largest beef exporter in the world, shipping 1.44m tonnes in 2021.

Alongside this, the US were also the world's second-largest beef importer after China, importing over 1m tonnes annually.

High volumes

The high-volume suppliers are Canada and Mexico – who are part of a North America free trade area – plus Australia, which has its own 428,000t quota and New Zealand which has a 213,000t quota.

Brazil are currently the third-largest supplier of beef to the US in 2022 behind Canada and Mexico but ahead of Australia. It doesn’t have any specific quota arrangements and has been availing of the 65,000t open quota which Irish exporters also use.

Irish beef exports to the US peaked in 2020 at 10,000t

This has been adequate up until now but with Brazilian beef supplies running eight times ahead of Q1 of 2021 at just over 46,000t this quota is now exhausted.

Irish beef exports to the US were down by almost a third in the first quarter to 1,461t of mainly forequarter beef and trimmings used in burger and mince manufacture.

Useful option

Irish beef exports to the US peaked in 2020 at 10,000t and while never a particularly high volume, it was still a useful option for the 11 Irish beef factories approved to supply the US.

However, the adding of a further 26% cost to Irish beef sales to the US makes Irish beef more uncompetitive and volumes are likely to decline further as the year progresses.

When Irish beef entered the US market in 2015, negotiations between the EU and US were ongoing for a free trade agreement (FTA), the Trans-Atlantic Trade and Investment Partnership (TTIP).

The negotiation got bogged down with refusal by the EU to accept US hormone-fed beef a major issue.

Enhanced quota

When Donald Trump was elected president, one of his first actions was to stop the negotiation and it has been in cold storage ever since.

An FTA would probably have created an enhanced quota for EU and Irish beef but that seems a long way off.

Alternatively, the US may create a dedicated quota for Brazil just as they have for Uruguay and Argentina. Again, there are no signs of this happening in the immediate future.

Closing of the US market isn’t an immediate problem for Irish beef farmers and exporters given the current demand for this type of beef in the UK and EU.

However, it was a useful alternative outlet and an option that the industry is keen to keep open. That will be increasingly difficult as Brazil consolidates its position as a supplier without a dedicated quota for its own use.